T

he government wants a higher fiscal risk cushion in the 2010 state budget, as a potential change in macroeconomic conditions - especially the price of crude oil - could hit the economy, the Finance Ministry says.

In a working group between the government and the House of Representatives' budget committee, the 2010 fiscal risk cushion had been set at Rp 5.6 trillion (US$553.09 million), less than the Rp 15.8 trillion deployed for this year.

"We suggest a rise in policy measures *the fiscal risk cushion* taken from unallocated funds, Finance Minister Sri Mulyani Indrawati said in a hearing on Thursday.

"Our reason is that in the process of designing the 2010 budget bill over three months, macroeconomic assumptions have changed a lot. So in the next 12 months many variations could take place, for example, oil prices might move in an unpredictable range."

She added that currency exchange rates were still rather dynamic and subject to fluctuations due to unstable global economy projections, which could impact on the equilibrium between currencies.

The Indonesian Crude Price (ICP) - the country's benchmark oil price - has been increased to $65 per barrel, up from $60 per barrel initially set in the 2010 budget bill, taking into account uncertain economic conditions ahead of recovery and recent movements in oil prices.

Oil lifting is expected to reach 965,000 barrel per day in 2010.

Suharso Monoarfa, vice chairman of the House's budget committee, said there might be an additional Rp 3 trillion allocated to the fiscal risk cushion, taken from savings in funds of ministries and state agencies.

"So it *the fiscal risk cushion*could be about Rp 8.6 trillion. I think it will be enough for 2010 as the economy moves toward recovery. Deviations will not be too large," he said.

Of Rp 949.66 trillion in total estimated state revenue next year, Rp 174.39 trillion is expected to come from oil and gas, said Suharso, up from Rp 147.46 trillion in the 2010 budget.